It is important to understand what interior designer licensing means in practice. Currently, no interior designer in any state is allowed to act as the prime contractor in a commercial setting without professional state recognition. Laws such as the current one in Florida are voluntary licensing programs. No one is forced to become licensed and those that choose not to apply for a license are not prevented from practicing interior design work. Rather, the benefit gained by licensing is that a designer who has demonstrated knowledge, skill and ability to the state may create and submit non-structural drawings in order to apply for permits related to the proposed work. In effect, it allows a designer to design to the fullest extent of their abilities after proving to the state that they have the knowledge and ability to do so.

Licensing also enables designers to expand their scope of service which in turn provides numerous economic benefits. Specifically, licensing in the state has allowed designers to establish small businesses that offer a full scope of services, hire workers, increase payrolls and contribute to the tax base. This has also meant reduced costs for consumers for these services; increased competition reduces costs. Overall, licensing in Florida has created a robust design industry that employs thousands of Floridians and contributes significantly to the economy.

Most important, licensing is not a program developed by any special interest group. It is a state program, created and managed by the state, to ensure that designers doing non-structural code-based design work are qualified to do that work.

Great article as always but it missed the third angle of the triangle in this: I am biz lawyer in Arizona. In the early days I represented a couple of guys in the check cashing business --were running around between stores with 200k in car. They sold out for big money to Mexican bank. What happened next? Bank (the BUSINESS) went to the legislature to get industry regulated -high capital req's, etc. In other words the bank shut the door behind it so little guys like my clients could no longer be in the business. So, where to the laws come from - special interest groups who draft the law, hand them to the legislature and promise "support."

Given all these licensing requirements, it is rather surprising that management consultants, who have far more influence on corporate well-being then hairstylists and florists, do not require any minimal training or apprenticeship to practice in any state, or any country for that matter.

While there are a vast number of small management consulting firms and independent management consultants operating in the US, it is the large firms with their staggering marketing and lobbying budgets that most strongly resist the notion of licensing or certification - they believe that their internal recruiting and training processes provide their consultants with sufficient credentials, and that the strength of their brands are sufficient to reassure clients of their capabilities.

Certification therefore is entirely voluntary and so until clients start to demand certified consultants (unlikely), or the smaller consulting firms combine their collective muscle (which so far they haven't) it seems unlikely that certification will become mandatory, certainly in the US, anytime soon.

Schumpeter seems unaware that for many of the silly examples mentioned, no one will stop you from registering a business, advertising, etc., just because you haven't got a license for that field. Look up 'migracion' in any US Spanish-language media: most of the advertisers have no license.

Hair braiding is an exception: hairdressers really do snitch on braiders to protect their turf, keeping braiders from leaving the informal economy. However, to free them from licensing will not re-start the job-creating machine. As for coffin makers, those of us old enough to remember The American Way of Death know that most are not men of God.

The Florida failure to free interior decorators illustrates the misperception about the Republican Party in general and the tea party in particular. Both talk a good libertarian line, but when it comes to action, whatever business wants, they give.

I fantasize that Schumpeter will follow this article with one about the benefits of professionalism. Consider a profession I wish had a license: engineering. Accountants and lawyers protect their livelihood though legal and economic changes, continuing to practice into old age. Engineers, like tissue paper, get thrown out as soon as they get used. Licensing would give them a system for continuing education to prolong their careers. As a country we're wasting years of training and experience by not making full use of the years of education of our engineers (both native-born and immigrant). The need to import engineers to the US comes in part from the short lifespan of the career.

Licensing is an Anglo-saxon obsession going back to the licensing of pubs, trading expeditions and the like to fund - you got it - royal expenses and warfare. It spread nicely to British colonies, hence the "raj" part of which Schumpeter "oddly" ignores the origin.
Common law countries rely on rules, by contrast. Don't confuse the two.

Bottom line is any type of restriction put on enterprising citizens will dampen the economy. License Raj was a failure in other countries (India for example) primarily because it stifled competition and increased prices.
America (along with other countries) needs to focus on opening markets and enabling competitions (at the local/state level) rather than putting restrictions.

My wife applied to the local community college for their RN program (she already has a BS in Education from a 4 year school).She was told she first had to be licensed as a CHHA (certified home health aid) which is a complete joke, 2 weeks of mostly just being there, lots of GED applicants, you keep taking the test til you pass, sort of like a written drivers exam.

The only purpose I could see for this was 1)additional tuition, 2)license fee, 3) criminal background check,4)TB test.

My wife has already completed half the academic work towards her RN but no potential employer would consider her til she sat thru 2 weeks with a class made up mostly of students getting gummint money.

Funny thing is high school grads can easily find home health aid jobs at 2x min wage

It does not make any kind of economic sense to make people pay for unnecessary education. Would you like to be forced to take classes in opening jars? Where's the benefit for you? Would you rather spend that money more wisely?

I think your example on your landlady wasn't a good one. If someone's business isn't generating enough income to support her then maybe she should think of getting a new profession instead of asking the government to give her classes to teach.

It is good to see a free market article (it does not go far enough - but it still is a free market article) in the Economist magazine.

Too often Economist magazine articles are, basically, demands for yet MORE government spending and regulations - especially for special interests (such as banks and other big business enterprises). So this article came as pleasant surprise.

As for "Republicans are bad at State level on occupational licensing" (as one of the comment people said) no doubt that is true (Public Choice would tend to push all but ideological Republicans in a bad direction - and the media, and so on, do not tend to like "ideological" people), but where is the evidence that Democrats are opposed to occupational licensing?

Occupational licensing is not really about protecting people - it is about increasing prices, it is a scam.

Many decades ago Milton Friedman (and other free market economists) proved that even the licensing of doctors and lawyers was NOT about protecting people, it was about increasing the incomes of the special interest groups involved.

People should, of course, be allowed to form associations (with examinations and so on) and be allowed to claim "do not go to people who do not pass our examinations - their treatment will kill you". Consumer groups and the media must then be allowed to check their claims - and give their own advise to people.

However, once VIOLENCE (government regulations) become involved then the whole thing becomes a corrupt scam.

And such a scam can only be opposed on the level of principle - it one says "it is OK to license X job but not Y job" then one has lost the struggle at the very start.

This is because of standard Public Choice - a concentrated interest (such as an occupational group) will, in the democratic political process, tend to trump a diffuse general interest.

If someone's income depends on keeping out competitors then they are really interested in getting a licencing regulation - whereas a general person only has a passing interest in an occupation that he does earn his living in.

How to deal with this?

It must be dealt with at the level of State Constitutions.

A State Constitution must clearly state that only the powers a State government has are those specifically granted to it.

And, of course, no power to license occupations must be granted to State governments.

However, there must also be freedom to trade over State lines - that is what "regulate interstate commerce" actually meant in 18th century English.

Such things as Americans being prevented (by force) from buying medical coverage over State lines are an outrage.

What an interesting piece! Licensing is but one facet of this issue. "Certification" can easily be added. Certification is where a group of people in a particular occupational specialty join together to form an organization that defines minimum "standards" for the profession. Newcomers must meet these educational and experiential standards if they wish to identify with the profession. There is often a “standardized” test with a minimum passing score. What with recertification and various fees, certification is a small industry. Government agencies and businesses often will only do business with someone who is certified. So here you have licensing without direct government involvement - thus, licensing is "the tip of the iceberg"!

Milton Friedman, the Nobel-prize-winning economist, refuted the need for liscensing 40 years ago, and made the argument against the doctors to boot. To say that we can't pick our own doctor implies that we also aren't capable of picking our rulers, either. And they will act accordingly.

@ LoaU5GLCf5
Loa, It should be obvious to anyone that only years of study in “mathematics/algebra, architecture, chemistry, biology, history, basic engineering” could possibly grant to one the “essential knowledge and skills required to understand and apply design principals and practices”. It should also be clear to even the most tasteless customer that only through a lengthy application process and with numerous demonstrated competencies can someone truly be qualified to recommend inoffensive color combinations and furniture arrangements for their home. As such, why is it necessary for the government to be involved in this business relationship at all? Don’t you think your customers recognize your expertise based upon your superior configurations and reputation? Because of your skill, your business should thrive with or without a license.

Why then is it necessary to implement these arbitrary barriers to entry, and restrict the freedom of individuals to practice your “profession”, if not only to artificially increase the rate you and your cartel charge your customers? Why then should I, the tax payer, subsidize you by paying for the undoubted army of bureaucrats necessary to implement these absurd credentials?

And please don’t tell me that the bourgeois bohemian crowd that commands your services is somehow different from the rest of us and will physically suffer from excessive salivation or some nonsense if the government does not protect them from poorly arranged feng sheui.

@LoaU5GLCf5
"They've subjected themselves to the rigors of the academic and professional training because they wanted to do so in order to be able to have the knowledge, skill and abilities required to design, redesign and, of course, decorate -- a knowledge and skill development process requiring mathematics/algebra, architecture, chemistry, biology, history, basic engineering, etc."

Personally, I am glad that people have to get some kind of experience before they hang out a shingle. I don't consider that a barrier to business. I consider it protection from any idiot with a wild hair proclaiming himself a "professional" whatever without having any idea what he's doing in the whatever business.

From an economic perspective, this article ignores the fact that all that training CREATES JOBS. People aren't just paying a government bureaucracy to stamp licenses. They are paying other people to educate them. My old landlady taught a class in interior design at a couple universities in DC. That supplemented her income when business got bad with the economic downturn. The students taking her class learned from her experience as well as expertise. It wasn't just paying for a license, as this article suggests.

Obama has nothing to do with this, it all happens at the "good" state level governments.

A lot of Republican smears against federal government are actually blatant attempts to distract attention from their state level shenanigans. Like when the public service is "privatized" and then sole sourced through one of the political contributors' companies.

That make sense. To creat jobs--more examinators and cash more tax money. Well if you want to continue practise your profession, then PAY.....
Well, may be all politicians should have at least a phD title in politology, so is fair.
Wow!! More bureaucratic more prosperity. A new economic theory. :-)